What Is the Tax Law Regarding Gift Money?
As of 2015, tax laws stipulate that the annual exclusion for gifts of money is $14,000 per person, per calendar year, according to the Internal Revenue Service. When gifting money, the donor is typically responsible for paying the gift tax.
A gift includes an indirect or direct transfer of money or gifts measured in money that is not returned to the donor, explains the IRS. The $14,000 exclusion stipulated for 2015 is per person, which means an individual can gift up to $14,000 per year to an unlimited number of people. Couples can gift property at a value up to $28,000 per person, per year, as of 2015. While most gifts are taxable, the IRS does not consider tuition or medical expenses paid for another person taxable. It also does not consider gifts to a spouse or political organization for its use as taxable gifts. Money gifts to charitable organizations are deductible expenses and exempt from tax.
An individual who gifts money or leaves an estate to an heir is still required to pay gift taxes, notes the IRS. Only the value of gifts donated to deductible charitable contributions are exempt from taxes when a person files his federal income tax.